Operational Excellence, Happiness And BPM

Every CEO yearns for it. It’s universally agreed to be A Good Thing. But beyond the motherhood and apple pie, what exactly is Operational Excellence? Is it like happiness: hard to define but we know it when we see it? And what part does BPM play in achieving Operational Excellence?

Prepping for a conference yesterday, I turn to Google for a definition for OE – but found no standard, and surprisingly little agreement.

We bounced it around in the office and came up with a definition, which naturally we tend to think is simply the best. But before I share it – here are the three most cogent definitions that Google threw up:

The US-based Institute for Operational Excellence defines OE as:

“…when each and every employee can see the flow of value to the customer, and fix that flow before it breaks down”.

Which is OK, but definitely rather static.

Kevin McManus bases his definition of OE on the Malcolm Baldrige Quality Award criteria:

“Operational excellence is demonstrated by results that reflect (1) sustained improvement over time, (2) improvement in all areas of importance, and (3) performance at a level that is at, or superior to, ‘best in class’ organizations.”

Which makes sense – ultimately it’s results that matter – but gives no clue as to how it is achieved.

The Dutch-based Opex Group defines OE as Reliability Centered Management so that:

“As a client of this organisation I know exactly what to expect and that is also what I actually get – right the first time, always on time and at a price that suits me.”

Which is also fine – serving customers is the ultimate purpose of any organization – but also a limited perspective.

So here’s what we came up with.

We defined OE as three interlinked capabilities:

  • The capability to flawlessly translate strategy into the reality of operational processes
  • The capability to engage the entire enterprise in collaboration on continuous process improvement
  • The capability to integrate the management of risks, controls and compliance within the one enterprise process framework.

I like the way that it puts process at the heart of these capabilities, and positions BPM as the enabling platform for OE. It also gives the right prominence to governance, without which nothing is sustainable.

PS Note to the OMG, the UN and other standards bodies: totally cool about you adopting this definition. No royalties or recognition but a bag of freebies is always appreciated.

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Mike Gammage is VP and Principal Consultant at Nimbus Partners. Mike has worked in performance improvement consulting, and more recently the BPM space, for more than two decades. He is particularly interested in the overlap between two very dynamic worlds: BPM and perfomance improvement (the drive across all industries to standardise, improve and automate) and sourcing and the virtualisation of the enterprise (the drive to create more flexible and lower-cost service solutions through outsourcing, offshoring and shared services). In either case, Mike believes the enterprise needs a single source of truth about its end-to-end business processes, as well as a framework for the design and implementation of change. It also needs to connect the end-user and all other stakeholders to ensure the adoption of change. These are the keys to sustainable transformation and continuous improvement.

  • Nicole S-G

    I love your definition, but I wonder how many companies would be able to achieve Operational Excellence using it!

    This list very accurately sets out the zen in which we would all love to find ourselves, but I fear that all we can really control is the centralised management of risks, controls and compliance. After all, it would be difficult to measure whether one's execution of strategy was flawless or whether the entire organisation has aligned itself to the process architecture that we set out…

    Perhaps it would be interesting to list the milestones one would need to achieve in order to reach this state? Or perhaps define some metrics and benchmarks? This could be the basis of a whole new institute for studies of excellence!

    Very stimulating stuff!